Understanding Just Compensation In Eminent Domain Cases

According to the United States Constitution, if the government needs a land for public use but that land is private property, the government cannot take it unless just compensation is first paid to the landowner. Unfortunately, it can be far from straightforward, trying to figure out what the value of a certain property may be. Here, we’ve included some information about eminent domain cases and just compensation.

But before that, let’s define eminent domain:

This is where the government uses the property, that was previously private, for some type of public use. Before this can happen, however, just compensation must be paid to the rightful owner of the land. The “Taking Clause” authorizes this as part of the United States Constitution (The Fifth Amendment). It states, “for public use, private property shall not be taken without compensation”.

Property Valuation

This “just compensation” previously referred to must be such that the landowner, compared to when they actually owned the land, is in basically the same relative position. Unfortunately, in eminent domain cases, disputes frequently arise as to the issue of valuation.

One might think that “fair market value” would be used – and it is – but that can also be a source of dispute. Fair market value may be determined by using some or all of the following:

    • Potential use or current use of the land
    • Level of development
    • Unique characteristics
    • Zoning
    • Accessibility
    • Size of the property

What isn’t used to determine value? Here are a few things:

    • The land’s connection to a neighborhood
    • Emotional loss of a social network
    • Expense, stress, and time of moving

Classic Property Evaluation Methods

There are several property valuations considered to be classic methods. They are as follows:

    • Cost Approach: If the next two approaches aren’t accurate or appropriate, this approach is used to value a property. If there is a truly unique “specialty structure” on the property, and it would have to be reproduced in order to replace it, this approach is used. A lot goes into this approach including evaluating the structure’s depreciation resulting from loss, how much the land is worth empty, and more.
    • Income Approach: For low income producing properties this approach is used. Based on projected future income, present value is determined. This means the property’s net operating income must be accurately determined. To figure this out, things like operating expenses, vacancy factor, rental income, and more are used.
    • Market Approach: To project fair market value, instant property is compared to recent property sales for evaluation. With residential properties, this method works out relatively well, provided comparable sales are available that are recent and relevant. Similar characteristics should be possessed by the comparable properties (i.e., bathrooms, bedrooms, a garage, pool, fireplace, etc.).

If you have been informed by the government that they want to use your land, and you don’t feel you’re getting just compensation, contact a lawyer immediately.

Carcich O’Shea Can Help You with Legal Issues

If you feel your rights have been violated – either by a private party, company, or the government – do not hesitate to contact us. We will fight for your rights.

There are several ways that you can get in touch with Carcich O’Shea. You can use our convenient online form, phone us at 201-988-1308, or email us at carcichoshea@gmail.com. Our offices are located at 401 Hackensack Ave.; Suite 707; in Hackensack, New Jersey, and at 222 N. Main St. in New York City (please call ahead either way).

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